Commission issues Communication on restructuring and employment

In early April 2005, the European Commission published a Communication outlining measures aimed at improving the EU’s capacity for anticipating and managing the impact of restructuring. The package of proposals includes enhanced coordination between key strands of EU policy, new and refocused financial support, adaptation of the regulatory framework and the greater involvement of the social partners. The Communication also initiates further consultations with the EU-level social partner organisations about restructuring and European Works Councils.

On 5 April 2005, the European Commission published a Communication (COM(2005) 120 final) setting out measures to be developed or strengthened with the aim of ensuring 'improved anticipation and management of restructuring' within the EU.

The document’s starting point is that EU competitiveness depends on enterprises being able to adapt rapidly to change, but that the social costs of restructuring must be kept to a minimum and EU policies must promote employability and alternative sources of jobs.

The package of proposals put forward by the Commission includes enhanced coordination between key strands of EU policy, new and refocused financial support, adaptation of the regulatory framework and the greater involvement of the social partners. At the same time, the Communication initiates the second phase of formal consultations with the EU-level social partner organisations on two issues: the social aspects of restructuring; and enhancing the effectiveness of European Works Councils (EWCs).

This feature highlights some of the main elements of the Communication and assesses its significance.

Key initiatives

The Commission argues that enhanced coordination is necessary across the range of existing EU policies that are relevant to restructuring, such as industrial, competition and employment policy. This is to be achieved by, among other measures, setting up an internal task force involving staff from the various Commission directorates-general concerned.

The Commission will propose a review of the European employment strategy to focus on three priorities of direct relevance to restructuring:

  • boosting the labour market participation rate;
  • improving the adaptability of workers and companies; and
  • investing more in 'human capital'.

The Communication also identifies reforms of EU financial instruments to focus more on restructuring-related developments, including the creation of a 'growth adjustment fund' with an annual budget of EUR 1 billion to enable public intervention where unforeseen events have a severe regional or sectoral impact.

The Commission is developing arrangements for focusing more effectively on sectors likely to experience significant changes in their short-term competitive situation. These will be set out in a Communication being prepared on the sectoral dimension of industrial policy. In 2005, the Commission will concentrate its efforts on developments in the textile and shipbuilding sectors, as well as the car industry.

The Dublin-based European Monitoring Centre on Change (EU0111237N) will be asked to develop its monitoring and analysis of restructuring with a view to building a firmer foundation for public debate on the issue.

In terms of strengthening the role of the social partners, the Commission proposes the greater involvement of sectoral social dialogue committees in restructuring issues. A forthcoming Commission Communication on corporate social responsibility will focus on positive initiatives taken by firms to handle restructuring in a socially responsible manner. The Commission will set up a Restructuring Forum during 2005 involving participants from the Commission, other European institutions, the social partners and outside specialists.

The Communication also highlights the relevance of a proposed modernisation of the EU regulatory framework (EU0502205F). In particular, a forthcoming Commission green paper on the development of labour law will look at developments concerning new models of work organisation and the role of the law in coping with these changes and easing labour market transition.

Second-stage consultation of the social partners on restructuring and EWCs

The Communication initiates the second stage of formal consultations with the EU-level social partner organisations under Article 138(3) of the EC Treaty on the related issues of handling restructuring and enhancing the role of EWCs.

The Commission first consulted the social partners on the socially-responsible management of restructuring in January 2002 (EU0201235F). The social partners responded in 2003 by agreeing a joint text entitled Orientations for reference in managing change and its social consequences (EU0307203F). The Commission feels that there has been 'insufficient dissemination, development [and] application of these agreed orientations', and this has prompted the Commission to pursue its initiative through a second stage of consultation.

The Commission launched a first-stage consultation of the social partners on measures to enhance the effectiveness of EWCs, including the possible revision of the EWCs Directive (94/45/EC), in April 2004 (EU0405203F). In its consultation paper, the Commission highlighted the challenges posed by industrial restructuring and the positive contribution that EWCs can make in smoothing the adjustment process. On 7 April 2005, the social partner organisations published a joint text identifying the 'lessons learned' from nine case studies of the operation of EWCs undertaken as part of the social partners’ work programme. Among the main points included is that EWCs 'can help management and workers ... adapt to change in fast-evolving transnational companies'.

The two second-stage consultations are taking place simultaneously, as they cover similar areas. In its Communication, the Commission '[encourages] the European social partners to intensify ongoing work and to start negotiations with a view to reaching an agreement among themselves on the requisite ways and means for:'

  • 'implementing mechanisms for applying and monitoring existing guidelines on restructuring, and a discussion on the way forward;'
  • 'encouraging adoption of the best practices set out in the existing guidelines on restructuring;'
  • 'promoting best practice in the way that EWCs operate, with a view to making them more effective, more especially as regards their role as agents for change; and'
  • 'devising a common approach to the other points in the communication which are of concern to them, more especially training, mobility, the sectoral dimension and the anticipatory aspect'.

The Commission says it will follow the work of the social partners and will look at the progress made between now and the 2006 'tripartite social summit' (EU0504201F).

Commentary

The Commission’s new five-year social agenda, issued in February 2005 (EU0502205F), identified the development of a 'strategic approach' to the 'anticipation and positive management of change' as one of the Commission’s 'priority areas'. The latest Communication reflects the Commission’s intention to adopt a more integrated, cross-departmental approach to restructuring-related issues. The establishment of an internal task force involving officials from the relevant Commission directorates-general is designed to facilitate such an approach.

In response to the Commission Communication, the European Trade Union Confederation (ETUC) released a statement, saying that 'Europe needs stronger worker consultation and better tools for managing restructuring'. It welcomed the Commission’s initiative and the 'reopening [of] a debate on ways to handle restructuring'. ETUC stressed that 'a coherent EU-wide strategy is vital'. Among other points, it called for 'the better use of existing mechanisms for managing change, including political, financial, legislative and contractual instruments', and 'advance notification and consultation with the social partners before restructuring gets underway, to set up a framework of measures to support workers in the process of change'. At the time of writing, the European Trade Union Confederation (ETUC), the Union of Industrial and Employers' Confederations of Europe (UNICE) has not yet reacted publicly to the Communication.

In industrial relations terms, the most notable aspect of the Communication is its initiation of the second phase of formal consultations with social partners on the related issues of socially responsible corporate restructuring and EWCs. In both cases, the Commission is 'primarily' asking the social partners to come up with practical mechanisms to apply the good practice principles they have already identified. The Commission makes it clear that it hopes that the social partners will enter into negotiations on these and related issues that will result in an agreement. It is perhaps significant that the Communication makes only a passing reference to the possibility of revising the EWCs Directive.

It is not yet clear how ETUC and UNICE are likely to respond to the Commission’s request to begin negotiations. The social partners have recently agreed a joint text concerning the operational aspects of EWCs, but the two organisations have very different objectives in this area. While UNICE will hope that the joint text demonstrates the value of a voluntary approach to enhancing the effectiveness of EWCs through the exchange of experience and identification of good practice, ETUC’s priority remains the early and extensive amendment of the EWCs Directive (EU0407207F). (Mark Hall, IRRU)

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